7a supp
<> <> ITEM NO: 7a_Supp_1 ____ DATE OF MEETING November 6, 2012 Tax Levy Discussion Follow-up November 6, 2012 Topics On October 23, 2012 Commission requested additional information for a tax levy discussion 2012 levy variance: deferrals vs. savings Include Fishermen's Terminal Net Shed improvements SR99 Tunnel Contribution Include potential $6 million for related projects 10-yr Real Estate financial forecast 10-yr tax levy sources and uses fund balance forecast Revised levy scenarios and further discussion 2 2012 Budget Variance The ending levy fund balance is forecast to be $32 million more than budget due to: Absolute gains grants, corridor sales, CIP improvements Change From 2012 Budget vs. Forecast Spending deferrals environmental and capital projects savings timing Rail Corridor 0 14 Net Shed follow-up environmental remediation 1 8 RE CIP 2 8 Budget included a capital project with TOTAL 3 30 total costs of $3.75 million Of that $750,000 was budgeted for 2012 Net shed costs are now $2.0 million included in the expense forecast (no capital dollars) 3 Alaskan Way Tunnel - updated Port has agreed to provide up to $300 million to fund the replacement of the Alaskan Way Viaduct with a tunnel $19 million has already been credited for previous improvements $31 million has been set aside in the transportation and infrastructure fund Additional funds may be side aside ($24 million to provide a total of $55 million per the 2012 budget) Increases funding gap, but reduces debt 2012 Budget Available cash only Contributed 19 19 Cash for related projects 6 6 Additional cash 49 25 Bond Proceeds 226 250 TOTAL 300 300 4 Real Estate Division Forecast Briefing 2013-2022 2013-2022 Forecast Briefing Real Estate Net Operating Income (NOI) Forecast Key Assumptions: Commercial Property occupancies consistent with 2013 Budget Recreational Boating occupancies grow slowly to pre-recession levels CPI increases for revenue and expenses 2.5% Deferred Maintenance program complete in 2013 Corporate/CDD allocations grow at 4.5% Revenue Bond Debt Service Provided by Corporate F&B Real Estate 2013-2022 Capital Budget consistent with projects/amounts presented at October 2 briefing 6 Real Estate Division Real Estate Division: 2013-2022 NOI Forecast 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2013-2022 $'s Thousands Budget Frcst Frcst Frcst Frcst Frcst Frcst Frcst Frcst Frcst Total Revenues Operating Revenues 32,516 33,019 33,562 34,300 35,132 36,068 37,010 38,057 39,058 40,094 358,815 Expenses Direct Expenses 36,485 32,441 32,017 32,811 33,352 34,473 35,002 35,879 36,706 37,587 346,753 Divisional Allocations (4,226) (2,464) (2,523) (2,583) (2,533) (2,597) (2,661) (2,728) (2,796) (2,865) (27,977) NOI Before Corp/CDD Alloc 257 3,042 4,068 4,072 4,313 4,192 4,669 4,906 5,148 5,372 40,039 Corporate Allocations 6,743 7,046 7,363 7,694 8,041 8,402 8,781 9,176 9,589 10,020 82,854 Net Operating Income (6,486) (4,004) (3,295) (3,622) (3,728) (4,211) (4,112) (4,269) (4,441) (4,648) (42,815) 7 Real Estate Division Real Estate Division: 2013-2022 NOI Forecast 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2013-2022 $'s Thousands Budget Frcst Frcst Frcst Frcst Frcst Frcst Frcst Frcst Frcst Total Revenues Operating Revenues 32,516 33,019 33,562 34,300 35,132 36,068 37,010 38,057 39,058 40,094 358,815 Expenses Direct Expenses 36,485 32,441 32,017 32,811 33,352 34,473 35,002 35,879 36,706 37,587 346,753 Divisional Allocations (4,226) (2,464) (2,523) (2,583) (2,533) (2,597) (2,661) (2,728) (2,796) (2,865) (27,977) NOI Before Corp/CDD Alloc 257 3,042 4,068 4,072 4,313 4,192 4,669 4,906 5,148 5,372 40,039 Corporate Allocations 6,743 7,046 7,363 7,694 8,041 8,402 8,781 9,176 9,589 10,020 82,854 Net Operating Income (Loss) (6,486) (4,004) (3,295) (3,622) (3,728) (4,211) (4,112) (4,269) (4,441) (4,648) (42,815) Additional Subsidy** 0 0 0 (10,796) (10,921) (9,778) (6,757) (1,749) (1,720) (1,744) (43,464) Total (6,486) (4,004) (3,295) (14,418) (14,649) (13,988) (10,869) (6,018) (6,160) (6,392) (86,278) Note**: Driven by the need to pay revenue bond debt service once general fund surplus is depleted 8 Real Estate Division Harbor Services Recreational Boating RECREATIONAL BOATING 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2013-2022 $'s Thousands Budget Frcst Frcst Frcst Frcst Frcst Frcst Frcst Frcst Frcst Total Revenues Operating Revenues 8,924 9,112 9,344 9,592 9,955 10,286 10,634 11,027 11,382 11,752 102,009 0 Expenses 0 Direct Expenses 4,684 4,310 4,419 4,531 4,673 4,751 4,871 4,994 5,049 5,139 47,422 Divisional Allocations 1,569 1,442 1,477 1,513 1,505 1,542 1,581 1,620 1,661 1,702 15,613 NOI Before Corp/CDD Alloc 2,671 3,359 3,447 3,549 3,777 3,993 4,182 4,413 4,673 4,911 38,974 Corporate Allocations 2,454 2,565 2,680 2,801 2,927 3,058 3,196 3,340 3,490 3,647 30,156 Net Operating Income 217 795 768 748 851 935 986 1,073 1,183 1,264 8,818 9 Real Estate Division Harbor Services Fishing & Commercial FISHING & COMMERCIAL 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2013-2022 $'s Thousands Budget Frcst Frcst Frcst Frcst Frcst Frcst Frcst Frcst Frcst Total Revenues Operating Revenues 2,764 2,745 2,779 2,787 2,713 2,761 2,785 2,855 2,900 2,952 28,041 Expenses Direct Expenses 4,116 3,782 2,829 2,899 2,972 3,371 3,122 3,200 3,280 3,362 32,933 Divisional Allocations 1,144 1,078 1,105 1,131 1,123 1,151 1,180 1,209 1,240 1,270 11,631 NOI Before Corp/CDD Alloc (2,496) (2,116) (1,154) (1,244) (1,381) (1,761) (1,517) (1,555) (1,619) (1,681) (16,523) Corporate Allocations 1,481 1,548 1,618 1,691 1,767 1,846 1,929 2,016 2,107 2,201 18,204 Net Operating Income (3,977) (3,664) (2,772) (2,934) (3,148) (3,607) (3,446) (3,571) (3,726) (3,882) (34,727) 10 Real Estate Division Portfolio Management: 2013-2022 Forecast PORTFOLIO MANAGEMENT 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2013-2022 $'s Thousands Budget Frcst Frcst Frcst Frcst Frcst Frcst Frcst Frcst Frcst Total Revenues Operating Revenues 19,965 20,330 20,590 21,102 21,627 22,165 22,717 23,282 23,861 24,455 220,093 Expenses Direct Expenses 16,951 15,873 16,089 16,492 16,904 17,326 17,760 18,204 18,659 19,125 173,382 Divisional Allocations 1,794 1,656 1,694 1,734 1,676 1,717 1,760 1,804 1,850 1,896 17,581 NOI Before Corp/CDD Alloc 1,220 2,801 2,806 2,876 3,048 3,121 3,196 3,274 3,353 3,434 29,130 Corporate/CDD Allocations 2,517 2,630 2,749 2,872 3,002 3,137 3,278 3,425 3,579 3,740 30,929 Net Operating Income (1,297) 171 58 4 46 (15) (81) (152) (227) (307) (1,799) 11 Real Estate Division Eastside Rail Corridor: 2013-2022 Forecast RAIL CORRIDOR 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2013-2022 $'s Thousands Budget Frcst Frcst Frcst Frcst Frcst Frcst Frcst Frcst Frcst Total Revenues Operating Revenues 7 7 7 7 8 8 8 8 8 9 76 Expenses Direct Expenses 413 423 434 445 456 467 479 491 503 516 4,627 Divisional Allocations 0 0 0 0 0 0 0 0 0 0 0 NOI Before Corp/CDD Alloc (406) (416) (427) (437) (448) (460) (471) (483) (495) (507) (4,550) Corporate/CDD Allocations 0 0 0 0 0 0 0 0 0 0 0 Net Operating Income (Loss) (406) (416) (427) (437) (448) (460) (471) (483) (495) (507) (4,550) 12 Real Estate Division RE Development & Planning: 2013-2022 Forecast RE DEVELOPMENT & PLANNING 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2013-2022 $'s Thousands Budget Frcst Frcst Frcst Frcst Frcst Frcst Frcst Frcst Frcst Total Revenues Operating Revenues 853 823 839 808 826 844 863 882 902 922 8,562 Expenses Direct Expenses 1,168 1,088 1,116 1,143 1,172 1,201 1,231 1,262 1,294 1,326 12,002 Divisional Allocations 338 321 328 336 336 345 353 362 371 381 3,472 NOI Before Corp/CDD Alloc (652) (586) (605) (672) (682) (702) (722) (742) (763) (785) (6,912) Corporate/CDD Allocations 290 303 317 331 346 361 378 395 412 431 3,564 Net Operating Income (Loss) (943) (889) (922) (1,003) (1,028) (1,063) (1,100) (1,137) (1,176) (1,216) (10,476) 13 Real Estate Division 2013-2022 Capital Budget Real Estate 2013 Capital Budget Capital Budget Summary TOTAL REAL ESTATE DIVISION 2013 2013-2017 2018-2022 2013-2022 Total Commission Authorized/Underway 9,688 9,861 0 9,861 Pending 2013 Authorization 4,290 15,265 0 15,265 Pending Future Authorization 300 32,080 75,899 107,979 Small Projects 2,810 11,895 9,385 21,280 TOTAL 17,088 69,101 85,284 154,385 15 RE 2013 Capital Plan By Location Fishermen's Terminal $ 000's FISHERMEN'S TERMINAL 2013 2013-2017 2018-2022 2013-2022 Total FT Waterside Projects Capital Projects Status Description Pending 2013 Authorization FT Net Shed 9 Roof Replacement 606 606 0 606 Small Projects FT Waterside Small Capital Projects 215 375 0 375 Pending Future Authorization FT Dock 4 Fixed Pier Improvement 0 3,500 0 3,500 Pending Future Authorization FT Dock 3 Fixed Pier Improvement 0 3,000 0 3,000 Pending Future Authorization FT NW Dock West Improvements 0 800 38,000 38,800 Pending Future Authorization FT S. Wall West End Improvements 0 0 1,674 1,674 Pending Future Authorization FT West Wall N. Fender Improvements 0 0 2,950 2,950 Pending Future Authorization FT West Wall N. Sheet Pile Corr Protect 0 0 2,775 2,775 Pending Future Authorization FT S. Wall Ctr Fnder Repl & Corr Protect 0 0 13,300 13,300 Pending Future Authorization FT West All S. Sheet Pile Corr Protect 0 0 2,200 2,200 Total FT Waterside 821 8,281 60,899 69,180 FT Upland Projects Capital Projects Status Description Commisson Authorized FT C15 HVAC Improvements 3,388 3,561 0 3,561 Pending 2013 Authorization FT Paving/Storm Upgrades 150 1,650 0 1,650 Pending 2013 Authorization FT C-2 (Norby) Bldg Roof & HVAC 150 1,150 0 1,150 Pending 2013 Authorization FT C-15 Bldg Subsidence Imp 175 2,750 0 2,750 Small Projects FT Uplands Small Capital Projects 125 550 835 1,385 Pending Future Authorization FT 25 Year Plan Improvements 300 13,000 0 13,000 Pending Future Authorization FT C14 (Downie) Bldg Roof & HVAC 0 950 0 950 Pending Future Authorization FT C-15 Bldg East Sewer Line 0 850 0 850 Total FT Landside 4,288 24,461 835 25,296 TOTAL FISHERMEN'S TERMINAL 5,109 32,742 61,734 94,476 16 RE 2013 Capital Plan By Location Shilshole Bay Marina $ 000's SHILSHOLE BAY MARINA 2013 2013-2017 2018-2022 2013-2022 Total Shilshole Bay Marina Recreational Boating Status Description Pending 2013 Authorization SBM Central Seawall Replacement 715 915 0 915 Pending 2013 Authorization SBM Paving 0 1,000 0 1,000 Pending 2013 Authorization SBM Restroom Replacement 100 4,800 0 4,800 Small Projects Small Projects 225 525 0 525 Pending Future Authorization SBM Fuel Float & Bldg Improvements 0 1,100 0 1,100 Total SBM Recreational Boating 1,040 8,340 0 8,340 Shilshole Bay Marina Commercial Prop 0 0 0 0 Total SBM Commercial Prop 0 0 0 0 TOTAL SHILSHOLE BAY MARINA 1,040 8,340 0 8,340 17 RE 2013 Capital Plan By Location Maritime Industrial Ctr & Harbor Island Marina $ 000's MARITIME INDUSTRIAL CENTER 2013 2013-2017 2018-2022 2013-2022 Total Maritime Industrial Center Status Description Pending 2013 Authorization MIC Building A1 Roof Replacement 570 570 0 570 Small Projects MIC Small Capital Projects 175 225 0 225 TOTAL MARITIME INDUSTRIAL CENTER 745 795 0 795 HARBOR ISLAND MARINA 2013 2013-2017 2018-2022 2013-2022 Total Harbor Island Marina Status Description Small Projects HIM Small Capital Projects 0 285 0 285 TOTAL HARBOR ISLAND MARINA 0 285 0 285 18 RE 2013 Capital Plan By Location Central Waterfront $ 000's CENTRAL WATERFRONT 2013 2013-2017 2018-2022 2013-2022 Total Central Waterfront- Bell Harbor Marina Status Description Small Projects Small Projects 115 115 0 115 Pending Future Authorization BHM PileWraps 0 3,450 0 3,450 Total BHM Recreational Boating 115 3,565 0 3,565 Central Waterfront Commercial Bldgs Small Projects Small Projects 370 1,060 0 1,060 Total Central Waterfront Commerical Bldgs 370 1,060 0 1,060 TOTAL CENTRAL WATERFRONT 485 4,625 0 4,625 19 RE 2013 Capital Plan By Location Other Commercial Properties $ 000's OTHER COMMERCIAL PROPERTIES 2013 2013-2017 2018-2022 2013-2022 Total Other Commercial Properties Status Description Pending 2013 Authorization Tenant Improvements -Capital 259 1,694 822 2,516 Small Projects Other Props Small Capital 60 560 0 560 Pending Future Authorization T102 Bldg Roof Replacement 0 2,430 0 2,430 Total Other Commercial Buildings 319 4,684 822 5,506 TOTAL OTHER COMMERCIAL PROPERTIES 319 4,684 822 5,506 20 RE 2013 Capital Plan By Location Pier 69 and Other Projects $ 000's PIER 69 AND OTHER PROJECTS 2013 2013-2017 2018-2022 2013-2022 Total Other Status Description Commission Authorized P69 N Apron Corrosion Control 6,300 6,300 0 6,300 Pending 2013 Authorization P69 Built Up Roof Replace 1,824 1,824 0 1,824 Small Projects Pier 69 Small Projects 145 145 0 145 Small Projects RE Fleet Replacement 476 3,466 3,228 6,694 Small Projects RE Preliminary Planning 250 1,250 1,250 2,500 Small Projects RE Technology Projects 250 1,250 1,250 2,500 Small Projects Marine Maintenance Small Projects 145 395 0 395 Small Projects Unspecified Small Projects 0 0 2,000 2,000 Pending Future Authorization RE: Contingency Renew.&Replace 0 3,000 15,000 18,000 Total Other 9,390 17,630 22,728 40,358 TOTAL P69 AND OTHER PROJECTS 9,390 17,630 22,728 40,358 21 Tax Levy Cash Flows & Options Annual Tax Levy Cash Flow Base case Based on continuing 2012 tax levy amount of $73 million Funds G.O. Bond debt service Funds "Other" FAST, Argo Yard, Highline noise mitigation, PortJobs and environmental remediation Funds Real Estate Division Capital projects (excludes $1 million funded with existing bond proceeds Operating deficit (excludes $80,000 non-cash environmental liability in 2013) Additional support beginning 2016, when the excess funds in the RE portion of the general fund are depleted Currently pays for allocated corporate CIP Currently pays for RE revenue bond debt service 23 Annual Tax Levy Cash Flow base case 10 Years $'000 2013 2014 2015 2016 2017 2013-2022 LEVY SOURCES Beginning Tax Levy Fund Balance 48,451 35,408 5,865 8,962 (6,781) 48,451 King County Rail Corridor Reimbursement 13,090 13,090 Annual levy 73,000 73,000 73,000 73,000 73,000 730,000 Total Sources: 121,451 108,408 91,955 81,962 66,219 791,541 LEVY USES General Obligation (G.O.) Bonds Debt Service (DS) G.O. Bonds DS - existing debt 39,551 39,543 29,851 29,845 29,848 307,184 G.O. Bonds DS for rail corridor - existing debt 805 15,745 15,744 32,294 G.O.Bonds DS New (SR99 Tunnel) (1) 19,850 19,850 138,950 Subtotal G.O. Bond debt service 40,357 55,288 45,594 49,695 49,698 478,428 Other uses Subtotal Other 22,907 27,366 16,042 15,853 14,715 189,694 Real Estate Support RE Capital - Committed 16,073 8,774 4,542 4,683 2,034 45,491 RE Capital - Business Plan Prospective 300 7,110 13,520 3,350 7,800 107,979 Corporate Capital allocation to RE 744 727 5,121 RE Support for Operating Deficit 6,406 4,004 3,295 3,622 3,728 42,735 Add'l Expense Offset to Cover Revenue Bond Debt Service 10,796 10,921 43,464 Subtotal RE Support 22,779 19,888 21,357 23,195 25,210 244,789 0 Total Uses: 86,043 102,543 82,993 88,743 89,623 912,912 Projected Ending Tax Levy Fund Balance 35,408 5,865 8,962 (6,781) (23,404) (121,371) 24 Levy Options 10/23/2012 Meeting Commission discussion at October 23 meeting Scenario #1 base case Scenario #2 adds $24 million to cash contribution to SR99 Tunnel Scenario # 3 upside potential Based on scenario #2 assumptions Environmental recoveries - $2 million per year Property sales - $7 million Excess fund balance - $24 million Scenario #4 upside potential plus extra costs Scenario #3 assumptions Additional environmental costs - $50 million Property acquisitions - $20 million 25 Levy Options Presented 10/23/2012 1. Current 2. #1 plus extra 3. #2 plus 4. #3 plus Projections T&I deposit upside extra costs potential Tunnel funding $31 mil. cash & $55 mil. cash & $55 mil. cash & $55 mil. cash & $250 mil. debt 226 mil. debt 226 mil. debt 226 mil. debt $73 mil. Flat Levy (121) mil. (132) mil. (81) mil. (151) mil. funding gap 2022 Annual increase 2.8% 3.0% 1.9% 3.4% to close gap 2013 Levy ($mil) 75.0 75.2 74.4 75.5 If delay increase 3.4% 3.7% 2.3% 4.1% to 2014 26 Levy Options - Revised Per Commission discussion on 10/23 revised Real Estate capital spending Reviewed history of actual spending vs. budget Reduced spending projection by 30% Applied to scenarios #2 & #3 No changes to scenarios to include potential additional costs Additional environmental remediation costs Changes to the Seaport business that could result in the need for tax support for capital projects Century agenda goals that could require funding beyond operating divisions' resources Sodo traffic mitigation 27 Levy Options Revised Unchanged Revised 1. Current 2. #1 plus extra 3. #2 plus upside 4. #3 plus extra Projections T&I deposit potential costs Tunnel funding $31 mil. cash & $55 mil. cash & $55 mil. cash & $55 mil. cash & $250 mil. debt 226 mil. debt 226 mil. debt 226 mil. debt $73 mil. Flat Levy (121) mil. (132) mil. (35) mil. (105) mil. funding gap 2022 Annual increase 2.8% 3.0% 0.9% 2.5% to close gap 2013 Levy ($mil) 75.0 75.2 73.6 74.8 If delay increase 3.4% 3.7% 1.1% 3.0% to 2014 28 Discussion Staff recommends Additional deposit of $24 million into the Transportation and Infrastructure Fund to provide a total of $55 million to the SR99 Tunnel (or related projects) Increase the levy in 2013 by 3% to $75.2 million Use a long-term planning assumption of 3% which will be reviewed annually and adjusted depending on actual experience Other potential options could be employed: Reduce, delay or eliminate some expenditures Increase Real Estate NOI to reduce operating subsidy Consider additional asset sales 29
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